The risk of an ineffective CIO
According to McKinsey, “executives’ current perceptions of IT performance are decidedly negative”. An interesting piece, Why CIOs should be business-strategy partners, informs us that the majority of organizations are not benefitting from an effective CIO, one who not only maintains the infrastructure necessary to run the business but also works with senior management to drive new business strategies.
For example, the survey behind the report found that:
- “..few executives say their IT leaders are closely involved in helping shape the strategic agenda, and confidence in IT’s ability to support growth and other business goals is waning”.
- “IT and business executives still differ in their understanding of the function’s priorities and budgets. Nearly half of technology respondents see cost cutting as a top priority—in stark contrast to the business side, where respondents say that supporting managerial decision making is one of IT’s top priorities.”
- “In the 2012 survey on business and technology, 57 percent of executives said IT facilitated their companies’ ability to enter new markets. Now only 35 percent say IT facilitates market entry, and 41 percent report no effect.”
With respect to the effectiveness of traditional IT functional processes, few rated performance as either completely or very effective:
- Managing IT infrastructure – 43%
- Governing IT performance – 26%
- Driving technology enablement or innovation in business processes and operations – 24%
- Actively managing IT organization’s health and culture (not only its performance) – 22%
- Introducing new technologies faster and/or more effectively than competitors – 18%
There was a marked difference when the CIO is active. “Where respondents say their CIOs are very or extremely involved in shaping enterprise-wide strategy, they report much higher IT effectiveness than their peers whose CIOs are less involved.” McKinsey goes on to say:
“We know from experience that CIOs with a seat at the strategy table have a better understanding of their businesses’ near- and longer-term technology needs. They are also more effective at driving partnerships and shared accountability with the business side. Unfortunately, CIOs don’t play this role of influential business executive at many organizations. The results show that just over half of all respondents say their CIOs are on their organizations’ most senior teams, and only one-third say their CIOs are very or extremely involved in shaping the overall business strategy and agenda.”
The report closes with some suggestions. I like the first one:
“The survey results suggest that companies would do well to empower and require their CIOs and other technology leaders to play a more meaningful role in shaping business strategy. This means shifting away from a CIO with a supplier mind-set who provides a cost-effective utility and toward IT leadership that is integrated into discussions of overall business strategy and contributes positively to innovating and building the business. Some ways to encourage such changes include modifying reporting lines (so the CIO reports to the CEO, for example, rather than to leaders of other support functions), establishing clear partnerships between the IT and corporate-strategy functions, and holding both business and IT leaders accountable for big business bets.”
Is your CIO effective, both in supplying the infrastructure to run the business and in working in partnership with business leaders to enable strategic progress?
Is this a risk that is understood and being addressed?
I welcome your comments.